Insurance: Rep. Reagan now favors expanding wind pool
|State Rep. Ron Reagan, an insurance agent who represents clients from an office in eastern Manatee County, says that legislators are "political animals" who will look for solutions to the state insurance crisis on the middle ground between what consumers want and what companies want. Islander Photo: Molly McCartney
There's a good chance that the special state legislative session convening in Tallahassee next week will make it possible for more of Anna Maria Island's commercial property owners to obtain wind insurance.
That is the thinking of state Rep. Ron Reagan, a Republican who represents eastern Manatee County and who has just been named to a key position as chairman of the House Insurance Committee.
He believes a majority of the Florida Legislature now favors expansion of the state-designated "wind pool," a zone that extends landward from the coast and varies county to county throughout Florida's waterfront. Property inside the wind pool is eligible for wind coverage from Citizens Property Insurance Corp., the state's insurer of last resort.
Reagan says he supports expanding the wind pool, which extends landward from the Gulf of Mexico in Sarasota County to Interstate 75, but only extends 1,000 feet landward on Anna Maria Island.
That is a remarkable turnaround from the spring of 2006, when Reagan cast a critical vote against legislation proposed by state Rep. Bill Galvano, who represents western Manatee, and who has been a leader in the effort to find solutions to the insurance crisis over availability and affordability.
The Galvano amendment to expand the wind pool failed by one vote, 56-57.
As a result of that legislative defeat, the only Anna Maria Island homes and businesses eligible for wind coverage from Citizens are those within 1,000 feet of the Gulf shoreline. Those properties outside the wind pool have either gone without wind insurance or paid thousands of additional dollars for coverage from unregulated surplus lines carriers.
Churches have also been affected. Wind coverage for Roser Memorial Community Church was canceled in May. The church is outside the wind pool and doesn't qualify for Citizens. An unregulated surplus carrier offered the church a wind policy for $225,000, but Roser could not afford the premium and had to go bare - without wind insurance.
Reagan, an insurance agent for more than two decades, explained the change in his philosophy about the wind pool expansion in a Jan. 4 interview with The Islander newspaper:
"My belief before was that the state should not be in the insurance business," Reagan said. "It is a function best handled by private enterprise and capitalism.
"But the reality is that the state is in the insurance business," he said, because private enterprise has failed to provide the insurance needed by homeowners and businesses in all parts of the state, "from the east coast to the west coast, and from the south up to the Panhandle."
As a result, Reagan said, he now thinks the state has a responsibility to provide the insurance products that people need. "If that is wind insurance on the Island, then let's do wind insurance on the Island," he said. "If it is wind insurance for the entire state of Florida, then let's do that. Have I changed my belief about this? Yes, no question about it."
Reagan said he thinks a majority of the members of the Legislature agree with him and his new point of view.
"I believe a lot of [legislators] have the same philosophy I have now," he said. "They didn't want us in the insurance business before, but now that we recognize that we are in it, we need to provide it."
Reagan's position as insurance chair
As chair of the Florida House Insurance Committee, Reagan expects to spend this week, Jan. 8-12, in Tallahassee, working on a package of legislation for the special session.
"There may be four or five bills to cover the different areas, as opposed to one huge package," he said.
Package one, he said, would be expansion of the wind pool. Other packages will focus on reinsurance, mitigation, and the Florida-only subsidiaries known as the pups and the cherry-picking practices that Gov. Charlie Crist has opposed.
The governor campaigned against cherry-picking, promising to require companies to write home insurance with wind coverage in Florida if they also write home insurance with wind coverage in other states.
Does Reagan agree with the governor's concept?
"Not really," Reagan said. "I have a problem telling companies what they have to do in Florida. I understand why he is saying that, but I don't see how we can do it. I don't know how you can force a business to do that."
An insurance agent since 1980, Reagan works at the Lakewood Ranch office of MGA Insurance Services. The agency handles a wide range of insurance lines, including homes, businesses and boats.
Has Reagan heard from the companies he represents, now that he is preparing for the special session and heading one of the key insurance committees?
"I have chatted with them," he said, "and I met with two of them in Tallahassee. I have asked them for their advice as well. We have to strike a balance between complete and total regulation of the industry and deregulation of the industry.
"Six states have gone to deregulation and in the long run competition took care of pricing and they now have very affordable prices and competitive prices. But short run, prices have a tendency to spike until the competition comes in. I don't think we in Florida are in a position where we can go to total deregulation. We can't do it. I don't think we need to over-regulate either.
"What I hear from the companies is that Florida is one of the most difficult states to deal with when it comes to regulation. So if we want to encourage companies to come to the state - take this exposure - we need to make it attractive to them to do it.
"The reality is that we will have to come up somewhere in the middle."
Balancing companies against consumers
Asked to explain how he can balance the needs of his work as an insurance agent against the needs of the people who elected him to the Legislature, Reagan gave this answer:
"There is no question but that we need to look out for the consumers in the state of Florida. I have been looking out for my personal clients for 26 years. In the past, it was easier when I had multiple companies to look at for the best coverage at the best price. That luxury doesn't exist anymore.
"So we as the state of Florida, if we are in the insurance business, which we are, we have consumers in this state who are being hurt by increasing premiums. And we are going to have to do something. Does that mean we reach into the pocketbook of Florida, pay for the subsidies, pay for the assessments? You know what? If that is what we need to do, fine, I will go along with that and I will accept that.
"And if that reeks of socialism, well, I tell you what, it is the proper thing to look at to protect the people of Florida. It is their tax dollars at work. So let's take some of the tax dollars if that means helping out and making sure that people can stay in their houses, then fine, I am willing to do that.
"Long term I don't believe in that philosophy, but short term, I am willing to do that."